Oil theft in the Niger Delta

As recently as early last year, Pam Tonye was just another young man in Port Harcourt, capital of Rivers State. Being an eyewitness to the lush lifestyles of oil company workers, his desire was to work in one of the oil companies. It did not pan out that way.  Four years after graduating from the university, the best he got was a teaching job in a private school, where he earned N20,000 monthly.

Two months after he started teaching, a chance meeting with a university classmate at the Trans Amadi Industrial Area of Port Harcourt opened a new window for Tonye. That window was that of criminality. His classmate is an illegal oil bunkerer, who told him of an opening in a company involved in illegal oil bunkering.

He wanted to work in an oil company, but not an illegal one. Tonye recoiled. But his friend assured him that those behind the illicit business are the high and mighty, who know their way around the appratus of security. There was also the seductive proposition of earning about N400,000 monthly. Less than six months after taking up the offer, Tonye had become the owner of a Nissan SUV and had started building a house in a choice area of Port Harcourt.


In the major Niger Delta cities like Port Harcourt, Warri, Yenagoa and Uyo, it is common for young men like Tonye  to pretend that  they work on rigs in the offshore fields of oil servicing companies when, in actual fact, they are oil thieves siphoning crude oil from either the Trans Niger Pipeline, TNP or Nembe Creek Trunk Line, NCTL, both of which have flow stations that feed into the Bonny Terminal. Aside the rupturing of pipelines for crude and pumping oil into barges, bunkerers steal by siphoning into drums, which are ferried to their ever-ready customers with  cargo speed boats.

Late last year, an exasperated President Goodluck Jonathan, with a tone of finality, declared theft of the country’s oil in the Niger Delta must be stopped. Jonathan had lamented that Nigeria is the only place on the planet where crude oil is stolen. The President’s frustration and threat to put an end to oil theft made no impression on the thieves who, with unfettered relish, have ramped up their larceny to a level unprecedented.

Last month, ENI, the Italian oil company, suspended its operations in Bayelsa State on account of unremitting assault on its pipelines by oil thieves. Currently, its onshore activities remain suspended, while it has been operating at a loss because of sabotage that has affected about 60 per cent of its production capacity. In announcing the suspension of opeartions, ENI, which was producing an average of 40,000 barrels daily, said the haemorrhage it suffered “had reached levels that were no longer sustainable recently, both from the point of view of safety for people and for the damage caused to the environment by these activities.”

Anglo-Dutch company, Shell Petroleum Development Corporation, SPDC, has not had better luck. In the last few weeks, the company has had to endure the loss of over 60,000 barrels of oil daily to oil thieves. SPDC operates a network of more than 9,000 kilometers of pipelines, particularly along the Nembe Creek Trunk Line, NCTL. The NCTL, which stretches over a 97-kilometre distance, serves as one of the main crude evacuation facilities in the Niger Delta, transporting both SPDC and third party output to the Bonny Terminal.

SPDC’s attempt in 2010 to boost its onshore activities via the investment of $1.1billion to replace the old NCTL yielded a wretched outcome, as it made the facility more attractive to the criminals, who made it a constant target. This resulted in frequent shutdowns to effect repairs on the pipelines.

In December 2011, due to a spill caused by an unsuccessful attempt by oil thieves to cut into a pipeline for crude theft connections, SPDC was forced to order a shutdown for repairs. After the repairs, the situation worsened. On 2 May, 2012, the trunk line had to be shutdown to mend 50 crude theft points.

Like others in the industry, Mutiu Sunmonu, SPDC Managing Director, is perplexed at the staggering amount of oil being stolen through pipeline rupture and the emergence of illegal refining activities. “We estimate that some 150,000 barrels of oil are stolen from facilities every day. This is a huge amount and this industrial scale theft is devastating for both the people and the environment,” Sunmonu said.

In locations where the oil thieves operate, thick smoke billows from the illegal refineries, a hint of boldness that was absent when the illicit trade was strictly for subsistence. Back then, thieves broke pipelines to siphon modest amounts of crude oil, which were crudely refined to obtain adulterated kerosine, which was sold for quick cash for survival. The new game in town is played on a scale that has yoked major oil companies with huge losses.

“Currently, bunkering has been elevated by the perpetrators to the level of building barges, yards and storage depots for stolen oil,” observed Sunmonu. Concerning SPDC, Sunmonu admits that the corporation is in a crisis that may force it to go the way of ENI. “Shell has already declared, in legal terms, that it cannot fulfil its contractual obligations due to incessant attacks on its pipelines. And it has actually been released from such contractual obligations due to the ugly trend,” he explained. SPDC’s Nigeria unit is seriously considering closing down the NCTL if the theft-induced pipeline attacks continue at the current levels.

Over the last seven years, Nigeria has suffered an estimated loss of $6billion annually from crude oil theft. An estimated 150,000 barrels of crude oil, valued at $35.5million, are daily plundered by rogues.

Sunmonu reckons that as at 2003, crude oil theft stood at some 100,000 barrels per day. Even that was slashed by the SPDC in collaboration with the government. However, the current scale is beyond what oil companies can hope to curtail. Ziakede Patrick Akpobolokemi, Director-General, Nigerian Maritime Administration and Safety Agency, NIMASA, explained that things have spun out of control because of the involvement of rich and influential individuals, who provide logistical support that has made oil pilfering smoother. He attributes the inability of government to successfully check the actions of the oil thieves to this factor.

This view is similar to that of Ewa Bassey Eko, Chairman, House of Representatives Committee on Gas Resources, who said: “Some politicians, including governors and highly placed individuals, are involved in illegal bunkering because this thing involves some level of sophistication.”

An evidence of the sophistication Eko referred to is supplied by quick reconstruction of illegal refineries that are regularly destroyed by the Joint Task Force consisting of the Army, Navy and paramilitary agencies. The quick rebuilding also offers an evidence of the profitability of the business and the support of powerful individuals that are sure of a market to which the illegal products are supplied. This informed Sunmonu’s conclusion that bunkering in the Niger Delta is currently a well-funded criminal activity, probably involving international syndicates. “If you fly the whole of our operational areas in the Niger Delta, you will see canoes, barges, and illegal refineries all over the place. The matter goes beyond the economics of financial losses to security as some of these illegal oil bunkering operators appear to have the support of some foreign countries,” said the SPDC boss.

In some quarters, the escalation of illicit bunkering has been attributed to the interest of the United States of America, which imports about 25 per cent of the world’s oil. Eleven per cent of such imports are said to be illegal, encouraging illegal oil merchants to stick to their trade. The U.S remains the largest importer of Nigeria’s crude oil, accounting for 40 per cent of the country’s total oil exports. Nigeria provides about 10 per cent of overall U.S oil imports and ranks as the fifth largest source for oil exports into the US.

The Organisation of Petroleum Exporting Countries, OPEC, declared recently that supply in Nigeria has fallen in the last few months, following disruptions by oil spills and theft. Consequently, oil corporations in Nigeria have failed in recent times to meet their supply quota as expected by OPEC. A survey of shipping data at OPEC, with statistics from Reuters, indicated that crude oil supply from the OPEC should average 30.18 million barrels per day (bpd), down from 30.42 million bpd in February 2013.

For the oil thieves, the marshlands of the Niger Delta are a boon. Tony  Attah, SPDC’s Vice President, Health Security and Environment and Corporate Affairs, expressed grave concern to this magazine about the level of sophistication, huge investments and the audacity of the oil thieves. He regretted that many people are sitting back and thinking that what is happening now is just a Shell problem.

Attah said the colossal damage to the environment, which has a direct impact on the society, is enough cause for concern to the West African sub-region. When asked if SPDC has been able to identify the criminals, Attah said: “We are in business. The maintenance of law and order belongs to government. In our own little way, we have been able to engage local surveillance. But we enjoy tremendous co-operation from security agencies. They are doing their best.”

He also identified the inherent challenge and near-impossibility  of  securing over 1,000 kilometres network of pipelines on the difficult Niger Delta terrain. The oil thieves, he argued, exploit this to the hilt. Each time there is a spill along the pipes or flow lines, he explained, there is a shut-in of production, which compels the company to isolate and depressurise the line, creating the right condition for the criminals to install new off-take points through which oil is siphoned.

Theft of oil in the Niger Delta, especially the Eastern flank made up of Rivers and Bayelsa, has risen alarmingly for a variety of reasons. The demand for it is high in the black market because it is user-friendly. And when refined, it spawns many by-products.

This magazine was told by a source close to a prominent former Niger Delta militant, who is currently a Federal Government contractor on waterways security, that members of the security agencies abet bunkerers. The source also disclosed that JTF units and militant bands have carved out turfs from which they make obscene sums of money by selling stolen crude. Before going after the small fries that are usually chased to give an impression of performance, security agencies are said to usually allow the filling of three barges. The source told TheNEWS that a naval officer once confessed to allowing barges of various sizes to siphon oil from the pipelines. The leader of the illegal operation, according to the source, is entitled to the biggest barge, while the second largest is used for given political elements and interests involved in the deal. The Naval hierachy is bribed with proceeds from the sale of the contents of the smallest barge.

However, such allegations have constantly been denied by the JTF, which boasts that it will continue to give bunkerers a tough time. But given the rise in the scale of theft, bunkerers are having a procession rather than the tough time the JTF promised.

The Petroleum and Natural Gas Senior Staff Association of Nigeria, PENAGASSAN, lamented that the country has lost billions of Naira to crude oil theft. The association fears that if such huge amounts are in wrong hands, the country’s democracy may be threatened. PENGASSAN President, Babatunde Ogun, recently said in Lagos that the Miscellaneous Offences Act prescribes life imprisonment for oil thieves, but the law is never used against the biggest criminals.

Recently, TheNEWS was one of the publications invited to have an aerial view of some the illegal oil theft sites. After the routine safety formalities by the officials of Caverton Helicopters, the chopper moved from the SPDC helipad at exactly 1.44pm, flying over Bodo in Ogoni to Cawthone Channel, Awoba, Krakrama and Ekulama.

Apart from serious devastation of the mangrove and rain forests, the visitors also saw a large expanse of burnt and devastated vegetation in the Ogoni axis. Webs of interlocking rivulets, rivers and tributaries that empty into the Atlantic Ocean were polluted with black coloured crude from leaks of vandalised pipelines. They had erected structures along the pipelines in waiting barges to move siphoned crude to an ever ready black market.

Arriving at reliable estimates of oil stolen remains a tricky task, varying according to the source. In 2010/2011, there were 237 reported incidents of crude oil theft from SPDC facilities that involved vandalism, spills, fire or arrests. In 2011, authorities arrested 145 people and seized among others, 18 tankers, 22 vehicles, 16 barges and 35 locally made boats.

These, however, are a tip of an iceberg of criminality, considering the unabating nature of pipeline assaults. Apart from the big time oil thieves, who bear sophisticated arms and have enormous financial muscle to set up barge buildings, storage facilities and tank farms, many in the local population are involved in the trade. The latter category, naturally, is one of small time hoodlums.

This category of bunkerers are very familiar with the terrain and operate by  by “scooping” from already damaged points on the pipelines. They transport their stolen oil by speed boats capable of moving smaller quantity of product, which are refined in the numerous illegal refineries all over the area. To such oil thieves, the end justifies the means. They are unconcerned by the inevitably adverse economic and health consequences that poorly refined products carry. Vehicles fed such products break down faster, while illegally refined kerosine accounts for explosion.

The Nigerian National Petroleum Corporation, NNPC, is also fretting over the roguery around the pipelines. The corporation said the activities of vandals obstruct the free flow of petroleum products and crude supply in its pipeline system as well as costing the country $12billion annually.

Andrew Yakubu, NNPC Managing Director, warned last month that if urgent steps were not taken to curb the activities of the oil thieves, the nation might experience a major oil crisis.

Yakubu revealed that huge amounts are being expended on cleaning up oil spills caused by thieves, while a lot is also spent on extra security arrangements to protect installations, even if the outcome has generally not met expectations.

The NNPC remains staunch in its support of government’s plan to deregulate the oil and gas sectors through the proposed Petroleum Industry Bill, PIB.

Oil companies made edgy by the spate of oil theft and pipeline damage have been holding back investments in billions of dollars. The country is estimated to have lost about $40 billion or N6.3 trillion investments in the last two years. Estimates from the Senate Committee on the Upstream Sector of the oil industry, indicate that about $28 billion dollars that should have  swollen the coffers of the sector has been partially lost or deferred since 2010.

Because of this grim situation, even the SPDC is holding back by not yet committing investment sums of about $30billion in two offshore deep water projects in Nigeria. Sunmonu recently said the SPDC would rather observe the current trend for a while before making any huge commitment. In the last quarter of 2012, Nigeria lost about $2.7 billion or N426 billion from a slide in crude oil production. According to the Central Bank of Nigeria, Fourth Quarter Economic Report, Nigeria’s oil revenue in the fourth quarter of last year slumped by N112.6 billion, as gross oil receipts in the Federation Account was N1.824 trillion– a 5.8per cent reduction from N1.936 trillion that was the figure recorded in the third quarter of the same year.

Oil companies in the country operate in astonishingly inclement conditions. Unlike their counterparts in other countries, which are assured of the security of their pipelines, those in Nigeria have to endure vandalisation of theirs as well as other irritations. Even the Presidential Amnesty Programme, vigorously promoted as the first step towards ending the brigandage in oil-bearing locations, has failed to stem the tide. Restless and criminally-minded youths in the Niger Delta remain persuaded that the surest pasport to good living is illegal bunkering.

This conviction, analysts reckon, has been helped by the process of payment to repentant militants, who embraced the amnesty programme. Rather than have them paid in designated pay centres, the government handed their monthly allowances to former warlords, who usually pay less than what the government stipulates. This, in many situations, rekindled the desire to return to criminality, especially illegal bunkering.

Source: PMNEWS–Funsho Balogun, additional reporting by Okafor Ofiebor/Port Harcourt

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